With Value and Revenue Rising, Opower Files Public IPO Plans

Opower Inc., a company that runs energy-efficiency and other programs for electric utilities, has publicly filed its IPO plans.

The filing comes on the heels of a big win for another company that touts novel ways to save energy for consumers and utilities – the acquisition by Google Inc. of high-tech thermostat maker Nest Labs Inc. for $3.2 billion.

The Wall Street Journal previously reported that Opower first filed with the Securities and Exchange Commission confidentially, under provisions of the Jumpstart Our Business Startups Act.

The company said in its new filing with the Securities & Exchange Commission that as of September it deemed its enterprise value to be $775.8 million, representing a big jump in assumed value from $274.8 million in June of last year. The company said it arrived at the higher value for its shares after hiring investment banks in September.

At that time, Opower increased its likelihood of going public, and also began comparing itself to software-as-a-service companies that had successful IPOs in the past two years. Previously, the company described itself in marketing materials as a “smart-grid” company.

Startups in the smart grid and clean technology sector generally have not produced hoped-for returns for investors, despite large venture capital outlays in recent years. In its SEC filing, Opower said it’s a “cloud-based software” company.

“Management believes that the factors that drove the significant increase [in value] were a shift in the manner in which we were viewed by investors and a general increase in the value of cloud-based solution companies during the third quarter of 2013,” its filing read.

The Arlington, Va.-based company has been growing its revenue, closing 2013 with $88.7 million, up from $51.8 million in 2012 and $28.7 million in 2011, according to the filing.

The company’s revenue growth came at a cost, as Opower registered a loss of $14.2 million last year, compared to $12.3 million in 2012, mostly due to a staffing increase. Opower had roughly 480 employees at the end of January, up from about 300 a year ago, as VentureWire previously reported.

Also in the “risk factors” section of its IPO filing, the company said it had to pay more for postage costs in 2013 for the paper reports it mails to utility customers.

Utilities pay Opower to run energy-efficiency and other programs, as utilities are under state mandates to implement such programs. The company uses techniques like peer-pressure to get consumers to save energy, informing them of how much their neighbors are saving, for example.

The company has raised about $67 million in preferred equity so far. New Enterprise Associates owns 21.8% of shares, MHS Capital Partners has 8.3%, and Accel Partners and Kleiner Perkins Caufield & Byers each own 5.4%.

Formed in 2007 by best friends Alex Laskey, the company’s president, and Daniel Yates, its chief executive, Opower quickly gained utility customers, serving 93 utilities as of the end of 2013. Opower’s ability to sign up many customers in a sector that’s often considered conservative and difficult for startups to crack is a rare feat.

The utility sector continues to present challenges. The company noted in its documents that “sales cycles for our products tend to be long and unpredictable.” Opower hopes to serve more consumers in each of its utilities’ service territory.

It is also expanding internationally, which poses its own problems. Opower is in the process of opening an office in Odessa, Ukraine, for example, to expand its research and development activities. Ukraine has been the site of political turmoil, as its president was ousted and Russia took control over an important region.

“This turmoil may impact our operations,” Opower said in its SEC documents.

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